Blinkit’s growth momentum is expected to outpace Swiggy’s Instamart by a wider margin in the June quarter as stronger order growth and improving profitability reinforce Eternal’s leadership in quick commerce, according to JM Financial.

The brokerage retained its ‘Buy’ rating on Eternal Ltd. and raised its 12-month target price to Rs 440 from Rs 400, implying an upside of about 69.9%. It also retained its ‘Reduce’ rating on Swiggy lowered its target price to Rs 250 from Rs 280, implying an upside of about 4.6%.

Blinkit Vs Instamart: Widening performance gap

JM Financial said the June quarter is likely to highlight the widening performance gap between the two listed quick commerce players, with Blinkit expected to deliver stronger growth while continuing to improve profitability.

“We expect Q1FY27 to reinforce the widening divergence between the listed quick commerce (QC) competition as Blinkit is likely to significantly outperform Instamart on growth,” JM Financial said.

The brokerage added, “The trade-off between profitability and growth will be the key aspect to monitor for Instamart while QoQ growth acceleration in Blinkit could positively surprise the market.”

JM Financial on Eternal: ‘Buy’

JM Financial retained its ‘Buy’ rating on Eternal and raised its target price to Rs 440 after rolling forward its valuation to June 2027 while broadly maintaining its operating assumptions.

The brokerage expects Blinkit to remain the key growth driver for Eternal as the business continues to benefit from rapid dark store expansion, improving operating leverage and healthy consumer demand during the summer season and the IPL.

Blinkit expected to deliver another strong quarter

JM Financial expects Blinkit’s net order value (NOV) to increase 17.7% quarter-on-quarter to Rs 16,900 crore during the June quarter, accelerating from 8.2% growth in the March quarter.

The brokerage said seasonal demand, IPL-led consumption and continued network expansion should support the stronger growth trajectory.

It also expects Blinkit’s adjusted EBITDA to improve sharply to Rs 125 crore from around Rs 37 crore in the previous quarter as revenue growth outpaces the increase in fixed costs.

“Blinkit to see sequential growth as well as profitability improvement,” JM Financial said.

The brokerage expects operating leverage to improve further because fixed costs are unlikely to increase in proportion to revenue despite annual wage revisions and continued investments in expansion.

Food delivery business expected to remain resilient

Beyond quick commerce, JM Financial expects Eternal’s food delivery business to maintain healthy momentum.

The brokerage forecasts gross order value growth of 19.2% year-on-year during the June quarter. It expects adjusted EBITDA margins to remain broadly stable at 5.4%, with operating leverage largely offsetting higher delivery costs and annual salary revisions.

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JM Financial believes the food delivery business continues to generate healthy cash flows, allowing Eternal to invest aggressively in Blinkit’s expansion while maintaining profitability at the consolidated level.

Dark store expansion remains a key growth driver

JM Financial Ltd. said Blinkit’s aggressive dark store rollout continues to strengthen its competitive position.

The brokerage expects the expanding fulfilment network to improve delivery density, reduce fulfilment costs and support higher order frequency across existing markets while enabling entry into newer cities.

It believes Blinkit’s scale advantage is becoming increasingly difficult for competitors to match as higher order density improves operating leverage across the network.

JM Financial on Swiggy: ‘Reduce’

JM Financial retained its ‘Reduce’ rating on Swiggy and lowered its target price to Rs 250 from Rs 280.

The brokerage said Swiggy continues to prioritise profitability over growth in Instamart by rationalising loss-making orders, resulting in slower expansion despite favourable seasonal demand.

It estimates Instamart’s NOV will increase only 5.2% quarter-on-quarter during the June quarter, substantially below Blinkit’s expected growth.

Contribution margins are expected to turn marginally positive after improving by around 260 basis points sequentially. However, adjusted EBITDA losses are still expected to remain elevated at around Rs 760 crore compared with Rs 860 crore in the March quarter.

“Investors are likely to focus on the trade-off between growth and profitability,” JM Financial said.

“It is, however, pertinent to note that moderating growth and elevated fixed costs amidst high competitive intensity make Instamart’s adjusted EBITDA break-even more elusive than earlier.”

Swiggy’s food delivery margins seen under pressure

JM Financial expects Swiggy’s food delivery gross order value to grow 18.9% year-on-year during the June quarter.

However, the brokerage expects adjusted EBITDA margins to decline to 3% from 3.3% in the previous quarter because of annual wage revisions and higher delivery expenses.

Reflecting the softer profitability outlook, JM Financial reduced its food delivery EBITDA estimates by 8-9% for FY27-FY29 and lowered its valuation multiple to 35 times EV/adjusted EBITDA from 38 times.

Brokerage assigns no value to Instamart in valuation

JM Financial continued to exclude Instamart and Swiggy’s other loss-making businesses from its valuation framework.

“We continue to assign no value to Instamart and other loss-making businesses… while excluding cash from our valuation owing to the continued high cash burn at a Consolidated level,” JM Financial said.

The brokerage added, “We maintain a ‘Reduce’ rating on the stock as we remain unconvinced that Instamart will see a meaningful turnaround with the current strategy.”

Conclusion 

JM Financial expects the June quarter to further highlight the widening gap between the country’s two listed quick commerce platforms.

The brokerage believes Blinkit’s combination of faster order growth, improving profitability and continued network expansion strengthens Eternal’s long-term investment case. In contrast, it continues to maintain a ‘Reduce’ rating on Swiggy as it expects the company’s strategy of balancing profitability and growth to delay a meaningful turnaround in Instamart.

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